| Schedule of pro forma condensed consolidated balance sheet |
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
At December 31, 2013
| |
|
|
|
|
|
|
|
|
|
|
| |
|
Newcastle
Consolidated
Historical (A)
|
|
Pro Forma
Adjustments Media
Spin-off (B)
|
|
Newcastle
Consolidated
Pro Forma
|
|
| Assets |
|
|
|
|
|
|
|
|
|
|
| Real estate securities, available-for-sale |
|
$ |
984,263 |
|
|
|
|
$ |
984,263 |
|
| Real estate related and other loans, held-for-sale, net |
|
|
437,530 |
|
|
|
|
|
437,530 |
|
| Residential mortgage loans, held-for-investment, net |
|
|
255,450 |
|
|
|
|
|
255,450 |
|
| Residential mortgage loans, held-for-sale, net |
|
|
2,185 |
|
|
|
|
|
2,185 |
|
| Subprime mortgage loans subject to call option |
|
|
406,217 |
|
|
|
|
|
406,217 |
|
| Investments in senior housing real estate, net of accumulated depreciation |
|
|
1,362,900 |
|
|
|
|
|
1,362,900 |
|
| Investments in other real estate, net of accumulated depreciation |
|
|
266,170 |
|
|
|
|
|
266,170 |
|
| Property, plant and equipment, net of accumulated depreciation |
|
|
270,188 |
|
|
(270,188 |
) |
|
|
|
| Intangibles, net of accumulated amortization |
|
|
345,125 |
|
|
(145,401 |
) |
|
199,724 |
|
| Goodwill |
|
|
126,686 |
|
|
(126,686 |
) |
|
|
|
| Other investments |
|
|
25,468 |
|
|
|
|
|
25,468 |
|
| Cash and cash equivalents |
|
|
105,944 |
|
|
(31,811 |
) |
|
74,133 |
|
| Restricted cash |
|
|
12,366 |
|
|
(6,477 |
) |
|
5,889 |
|
| Receivables and other assets |
|
|
252,071 |
|
|
(110,183 |
) |
|
141,888 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Total Assets |
|
$ |
4,852,563 |
|
$ |
(690,746 |
) |
$ |
4,161,817 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Liabilities and Equity |
|
|
|
|
|
|
|
|
|
|
| Liabilities |
|
|
|
|
|
|
|
|
|
|
| CDO bonds payable |
|
$ |
544,525 |
|
$ |
|
|
$ |
544,525 |
|
| Other bonds and notes payable |
|
|
230,279 |
|
|
|
|
|
230,279 |
|
| Repurchase agreements |
|
|
556,347 |
|
|
|
|
|
556,347 |
|
| Mortgage notes payable |
|
|
1,076,828 |
|
|
|
|
|
1,076,828 |
|
| Credit facilities, media and golf |
|
|
334,514 |
|
|
(182,016 |
) |
|
152,498 |
|
| Financing of subprime mortgage loans subject to call option |
|
|
406,217 |
|
|
|
|
|
406,217 |
|
| Junior subordinated notes payable |
|
|
51,237 |
|
|
|
|
|
51,237 |
|
| Dividends payable |
|
|
36,075 |
|
|
|
|
|
36,075 |
|
| Accounts payable, accrued expenses and other liabilities |
|
|
390,417 |
|
|
(113,164 |
) |
|
277,253 |
|
| Total Liabilities |
|
$ |
3,626,439 |
|
$ |
(295,180 |
) |
$ |
3,331,259 |
|
| |
| Equity |
|
|
|
|
|
|
|
|
|
|
| Preferred stock |
|
$ |
61,583 |
|
$ |
|
|
$ |
61,583 |
|
| Common stock |
|
|
3,515 |
|
|
|
|
|
3,515 |
|
| Additional paid-in capital |
|
|
2,970,786 |
|
|
(334,653 |
) |
|
2,636,133 |
|
| Accumulated deficit |
|
|
(1,947,913 |
) |
|
|
|
|
(1,947,913 |
) |
| Accumulated other comprehensive income |
|
|
76,874 |
|
|
|
|
|
76,874 |
|
| Noncontrolling interests |
|
|
61,279 |
|
|
(60,913 |
) |
|
366 |
|
| Total Equity |
|
$ |
1,226,124 |
|
$ |
(395,566 |
) |
$ |
830,558 |
|
| |
| Total Liabilities and Equity |
|
$ |
4,852,563 |
|
$ |
(690,746 |
) |
$ |
4,161,817 |
|
| |
|
| (A) |
Represents Newcastles historical consolidated balance sheet at December 31, 2013. |
| (B) |
Represents New Medias historical consolidated balance sheet at December 31, 2013. |
|
| Schedule of pro forma condensed consolidated statements of income |
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME
Year ended December 31, 2013
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
Pro Forma Adjustments |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
Newcastle
Consolidated
Historical (A)
|
|
New Residential
Spin-off (B)
|
|
Holiday
Portfolio
Acquisition
|
|
Media
Spin-off (C)
|
|
Newcastle
Consolidated Pro
Forma
|
|
| Interest income |
|
$ |
213,715 |
|
$ |
(12,019 |
) |
$ |
|
|
$ |
(8,399 |
) |
|
193,297 |
|
| Interest expense |
|
|
90,973 |
|
|
(2,152 |
) |
|
33,844 |
(D) |
|
(1,591 |
) |
|
121,074 |
|
| Net interest income |
|
|
122,742 |
|
|
(9,867 |
) |
|
(33,844 |
) |
|
(6,808 |
) |
|
72,223 |
|
| Impairment (Reversal) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Valuation allowance (reversal) on loans |
|
|
(25,035 |
) |
|
|
|
|
|
|
|
12,027 |
|
|
(13,008 |
) |
| Other-than-temporary impairment on securities |
|
|
5,222 |
|
|
(3,756 |
) |
|
|
|
|
|
|
|
1,466 |
|
| Impairment of long-lived assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Portion of other-than-temporary impairment on securities recognized in other comprehensive income (loss), net of the reversal of other comprehensive loss into net income (loss) |
|
|
44 |
|
|
|
|
|
|
|
|
|
|
|
44 |
|
| |
|
|
(19,769 |
) |
|
(3,756 |
) |
|
|
|
|
12,027 |
|
|
(11,498 |
) |
| Net interest income (loss) after impairment/reversal |
|
|
142,511 |
|
|
(6,111 |
) |
|
(33,844 |
) |
|
(18,835 |
) |
|
83,721 |
|
| Other Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Rental income |
|
|
74,936 |
|
|
|
|
|
87,625 |
(E) |
|
|
|
|
162,561 |
|
| Care and ancillary income - senior housing |
|
|
12,387 |
|
|
|
|
|
|
|
|
|
|
|
12,387 |
|
| Advertising income - media |
|
|
38,757 |
|
|
|
|
|
|
|
|
(38,757 |
) |
|
|
|
| Circulation income - media |
|
|
16,649 |
|
|
|
|
|
|
|
|
(16,649 |
) |
|
|
|
| Commercial printing and other income - media |
|
|
6,231 |
|
|
|
|
|
|
|
|
(6,231 |
) |
|
|
|
| Total other revenues |
|
|
148,960 |
|
|
|
|
|
87,625 |
|
|
(61,637 |
) |
|
174,948 |
|
| Other Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gain (loss) on settlement of investments, net |
|
|
17,369 |
|
|
(58 |
) |
|
|
|
|
(7,216 |
) |
|
10,095 |
|
| Gain on extinguishment of debt |
|
|
4,565 |
|
|
|
|
|
|
|
|
|
|
|
4,565 |
|
| Equity in earnings of Local Media Group |
|
|
1,870 |
|
|
|
|
|
|
|
|
(1,870 |
) |
|
|
|
| Other income (loss), net |
|
|
13,340 |
|
|
|
|
|
|
|
|
(1,514 |
) |
|
11,826 |
|
| |
|
|
37,144 |
|
|
(58 |
) |
|
|
|
|
(10,600 |
) |
|
26,486 |
|
| Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loan and security servicing expense |
|
|
3,857 |
|
|
(108 |
) |
|
|
|
|
|
|
|
3,749 |
|
| Property operating expenses |
|
|
53,718 |
|
|
|
|
|
|
|
|
|
|
|
53,718 |
|
| Media operating expenses |
|
|
49,092 |
|
|
|
|
|
|
|
|
(49,092 |
) |
|
|
|
| General and administrative expense |
|
|
36,775 |
|
|
(38 |
) |
|
|
|
|
(1,579 |
) |
|
35,158 |
|
| Management fee to affiliate |
|
|
33,091 |
|
|
(4,134 |
) |
|
4,038 |
(F) |
|
|
|
|
32,995 |
|
| Depreciation and amortization |
|
|
30,973 |
|
|
|
|
|
48,264 |
(G) |
|
(3,845 |
) |
|
75,392 |
|
| |
|
|
207,506 |
|
|
(4,280 |
) |
|
52,302 |
|
|
(54,516 |
) |
|
201,012 |
|
| Income (loss) from continuing operations before income tax |
|
|
121,109 |
|
|
(1,889 |
) |
|
1,479 |
|
|
(36,556 |
) |
|
84,143 |
|
| Income tax expense |
|
|
2,100 |
|
|
|
|
|
|
|
|
(1,062 |
) |
|
1,038 |
|
| Income from continuing operations |
|
|
119,009 |
|
|
(1,889 |
) |
|
1,479 |
|
|
(35,494 |
) |
|
83,105 |
|
| Income from discontinued operations |
|
|
33,332 |
|
|
|
|
|
|
|
|
|
|
|
33,332 |
|
| Net income |
|
|
152,341 |
|
|
(1,889 |
) |
|
1,479 |
|
|
(35,494 |
) |
|
116,437 |
|
| Preferred dividends |
|
|
(5,580 |
) |
|
|
|
|
|
|
|
|
|
|
(5,580 |
) |
| Net income attributable to noncontrolling interests |
|
|
(928 |
) |
|
|
|
|
|
|
|
928 |
|
|
|
|
| Income (loss) applicable to common stockholders |
|
$ |
145,833 |
|
$ |
(1,889 |
) |
$ |
1,479 |
|
$ |
(34,566 |
) |
$ |
110,857 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (loss) from continuing operations per share of common stock, after preferred dividends and noncontrolling interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic |
|
|
0.41 |
|
|
|
|
|
|
|
|
|
|
|
0.24 |
(H) |
| Diluted |
|
|
0.40 |
|
|
|
|
|
|
|
|
|
|
|
0.23 |
(H) |
| Weighted Average Number of Shares of Common Stock Outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic |
|
|
276,881,294 |
|
|
|
|
|
|
|
|
|
|
|
328,481,457 |
(H) |
| Diluted |
|
|
283,309,645 |
|
|
|
|
|
|
|
|
|
|
|
334,909,808 |
(H) |
| |
|
| (A) |
Represents Newcastles historical consolidated statement of income for the year ended December 31, 2013, excluding discontinued operations. |
| (B) |
Represents the portion of New Residentials historical consolidated statement of income for the period from January 1, 2013 to May 15, 2013 that is not included in Newcastles income (loss) from discontinued income. After the May 15, 2013 spin-off of New Residential from Newcastle, no results of New Residential have been reported in Newcastles consolidated statement of income. |
| (C) |
Represents the portion of New Medias historical consolidated statement of income for the year ended December 31, 2013, the impact of the GateHouse debt held by Newcastle through the November 26, 2013 restructuring and the equity method investment income recorded for the investment in Local Media Group for the period from September 3, 2013 until November 26, 2013. |
| (D) |
Represents the estimated interest expense on the loan related to the acquisition of the Holiday Portfolio including the estimated amortization of deferred financing costs. |
| (E) |
Represents the estimated rental income from the independent senior housing properties acquired under a triple net lease agreement for the year ended December 31, 2013. |
| (F) |
Represents the estimated management fees for the year ended December 31, 2013 that Newcastle would have paid Fortress Investment Group LLC as a result of the public offering of common stock in November 2013. |
| (G) |
Represents the estimated depreciation expense for the year ended December 31, 2013 based on the carrying value of the assets acquired and their estimated useful life. |
| (H) |
Weighted average number of shares of common stock outstanding and income from continuing operations per share of common stock, after preferred dividends and noncontrolling interest, were adjusted retrospectively to reflect the issuance of 57,950,952 shares on November 22, 2013, the proceeds of which were used to fund a portion of the purchase price for the Holiday Portfolio. Weighted average number of shares of common stock outstanding and income from continuing operations per share of common stock, after preferred dividends and noncontrolling interest were not adjusted to include potential additional diluted shares as a result of the changes to outstanding Newcastle options from the spin-offs. The number of additional diluted shares will depend on various factors, including the share prices of Newcastle, New Residential and New Media subsequent to the spin-offs. |
| (I) |
The effect of the Holiday Portfolio acquisition on 2012 revenue if Newcastle had consummated the acquisition as of January 1, 2012 would have been $89.3 million. The effect of this acquisition on income from continuing operations would have been $0.1 million. |
|